Foreign interest in Malaysian investment banks: ECM Libra

By Chong Pooi KoonPublished: 2009/05/21

For some regional financial institutions seeking to expand to Malaysia, a standalone investment bank could be the cheapest entry point

ECM Libra Financial Group Bhd (2143), an investment bank, says some foreign banks are keen to take strategic stakes in local standalone investment banks after Bank Negara Malaysia eased ownership rules last month.

Executive chairman and chief executive officer Datuk Seri Kalimullah Masheerul Hassan said for some regional financial institutions seeking to expand to Malaysia, a standalone investment bank could be the cheapest entry point.

He said the central bank's move last month to raise foreign ownership limit in investment banks to 70 per cent from 49 per cent previously is attractive for prospective buyers.

"It's good to get them to come in, because with their expertise and balance sheet it will allow the local investment banks to underwrite larger deals," Kalimullah told reporters after a shareholders' meeting in Kuala Lumpur yesterday.
"There is interest shown from foreign parties, from what I gathered, but there's nothing concrete," he said.

ECM Libra's net profit fell 94 per cent to RM5.1 million in the year ended January 31 2009, from RM82.4 million last year due to the sharp drop in stockmarket trading volume last year.

Kalimullah is however confident that it will do much better this year.

"It has been a promising start for us this year. Our brokerage income has increased three-fold due to Bursa Malaysia's increased volume, and investors are starting to show interest in doing deals again," he said.

ECM has also hired more remisiers and has enlarged its balance sheet through deposit-taking, which should help improve earnings this year. It hopes to double the 200-odd remisiers it has currently in a couple of years, he said.

Being a small investment bank, he said, ECM will look at niche areas to compete with the bigger capital market players. It may set up property funds, for example.

The global financial crisis also allows Malaysian investment banks like ECM to hire experienced bankers who were previously keen to work only in more sophisticated financial markets like New York, London or Hong Kong. Now, these new recruits should help create more innovative products that will help its earnings, he said.